In continuation of our review of the NHI Health Insurance for South Africa White Paper released on 10th December 2015 we need to look at the demand (patient need) and supply side (health care provisions) issues that are revealed and attempted to be resolved through the reform.

‘Demand side’ management by Health Insurers / Medical Schemes: What’s their role? What are the virtues of a single vs. competing funds?

Schemes and their Administrators / Managed Care efforts are failing to adequately manage the ‘production’ efforts of the private supply side. This is because Schemes don’t compete on the overall ‘value’ proposition for consumers i.e. the member experience and outcomes of the system.

They have a short term focus because cover is sold on an annual term. And because Scheme cover is sold nationally, they aren’t involved in local level system performance and they just don’t undertake the role of ‘managers’ of the system. Nor does anyone else.

Would a single Scheme with local offices do better?

Maybe, but the price is likely be a system that is also less responsive to consumers.

We like the Dutch system where membership of a choice one of a number of competing Schemes is mandatory, and the State pays contributions for the poor.

‘Supply side’ provision: What is the policy aim for the design of the effective supply model; and how will this be engineered?

A ‘vision’ of an effective supply model for the whole of SA is not evident in the plan at all, and in our view is the biggest weakness of the whole proposal.

If purchase function and demand side management is solved, with what services would the Scheme (or Schemes) contract? Neither of the current models public or private is an obvious basis from which to build a new system. Nor is there a clear policy vision nor aims for how the sector will be structured and how its processes will work.

Paying differently – DRGs and capitation – are a requirement but experience tells that this alone does not lead to structural change. That takes a whole lot more.

A clear vision of the system and the engineering required to achieve it. With:

population level structural planning

a variety of new commercial organisational models based on teamwork and useful competition between integrated systems

supportive State funding

supportive State regulation

clear process and outcome measures

outcome linked rewards

Unfortunately, the document is largely silent on supply side reform, appearing to believe that the public sector needs a few tweaks to make it a viable basis and that any gaps can be contracted from private providers.

This simply isn’t realistic.

In our view, the key to reform are new models of care delivery that are based on:

Consistent with the Green Paper, the proposal is based on an insurance model where the insurer is a single inclusive national fund that collects and pools contributions and undertakes selective purchasing / contracting from providers on behalf of the population.

For us, these are the issues that arise:

What problem Is South Africa solving?

What is the tactical approach to achieve Universal Health Care in SA?

‘Demand side’ management by Health Insurers / Medical Schemes: what’s their role? What are the virtues of a single vs. competing funds?

‘Supply side’ provision: What is the policy aim for the design of the effective supply model; and how will this be engineered?

Addressing the first 2 issues:

The Problem of the public sector is poor service and responsiveness, because it is not structured for its post-apartheid role and is badly managed. Many words written about this, were not going to add more here.

By contrast, there is too little useful analysis of the performance of the private sector, which has a major, worsening crisis of affordability in regard to most South Africans (including current Scheme members) because it provides relatively poor ‘value’. We don’t agree that this can be mostly ascribed to aging and selection. Instead we believe the sector performs relatively poorly:

It has huge excess capacity relative to the currently covered population (it could easily deal with double the population) and consequently over-servicing is rife (in many regions) as providers struggle to meet their (‘threshold’/ sustainable) income requirements.

This process marginalises thousands of general practitioners; invalidates any role for mid-level workers and obliges specialists to take on the primary care role for which they are poorly suited.

All this is made worse by a tariff schedule that fragments patient care because it rewards clinicians working alone and for each service they perform. (A better alternative would be to fund organised teams that are paid to look after the care of a population for which they are accountable and to get merit rewards for doing this well – more in the next posts)

The result is that, while the sector is good at dealing with acute problems, it is badly structured to treat patients with complex medical and social problems, especially the aged. But it is on these patients that the bulk of healthcare costs are expended. They experience poor quality, expensive care, driven by unmanaged and plenty of unneeded hospital services.

Fix this and you go a long way to getting better value and lower premiums.

So is there a feasible tactical approach outlined in the white paper?

We don’t think so. Today there is a two tier system that serve populations reflecting the enormous income and wealth disparities of South Africans. They have very different structures and organisation, costs and outcomes. How is it possible to achieve a unified system in 14 years? We believe this is neither economically or politically feasible, nor is it practical.

But is there a better alternative?

Developing countries with similar income inequality problems that have succeeded in healthcare reform have succeeded by understanding the economics of the healthcare system. Eddy van Doorslaer from the Institute for Health Policy & Management & School of Economics Erasmus University Rotterdam provided a good overview of Asian healthcare changes. Essentially they adopt an incremental approach with clear supply strategies linked to demand within income bands, with a special focus on the ‘gap’ market i.e. people neither wealthy nor poor.

New efficient delivery models of care are promoted that meet the affordability and care needs of the ‘gap’ market segment are key. These are not cheap and nasty nor do they offer a narrow range of therapies.

They are affordable because they are efficient.

This is supported by State provide partial subsidies for access via Scheme premiums as well as for supply side innovation.

It offers support in other ways too because supply side reform is the key to success.

Finally, systems that provide comprehensive care of good quality at affordable price have strong community level primary care services. They also rely on market driven competitive systems to deliver iterative population value and market equilibrium, within a population determined capacity plan.

Intrinsic to the PPO Serve model is a Value Contract between clinicians organised in one of the ICC™ we support and Medical Schemes. This contract replaces Fee for Service (FFS) with a new arrangement that promotes ‘continual healing relationships’. (more…)

Patients tell us that current healthcare system is often confusing and with things happening for unclear reasons including lots of waiting. They feel that they bounce between multiple different clinicians, who don’t talk to each other or share a common care plan. So there’s lots of wasteful duplication of tests and therapies, as well as conflicting information which makes it difficult to make sense of it all.

At PPO Serve we believe that Integrated Clinical Consortia™ are the new way that healthcare should be delivered. This is how it works:

Care is delivered to all patients by professionals working in teams that are made up of doctors (both general practitioners and specialists) and other health care workers. They work together, with shared support staff and a locally connected electronic Intelligent Care System. The team follows in-patients to the wards (including labour wards) of co-operating hospitals.

The Consortia are organised so that the patients’ medical problem gets the right attention at the right time. The Integrated Care team knows that effective and good quality healthcare makes patients happy and is affordable.

The care plan is personalised for you, comprehensively covering all your medical and social issues and includes your preferences between treatment options.

Clinicians working in a team ensures there is a clear, regular contact with every person who is enrolled with the service, be they pregnant young women or children with blocked ears and winter chest infections to the adult with chronic illness like hypertension and diabetes.

Past medical problems are carefully noted over many years, and the combined story leads to a well-thought-out care plan for every person. This plan is embedded in an Intelligent Care System and leads to ongoing care that is planned and effective, and has no gaps or any waste.

The sooner you join, and the longer you’re a member, the more the team knows about your issues and your preferences, leading to higher quality and a better experience of care and to greater satisfaction.

In order to get care in this manner, your Medical Scheme needs to back the formation of these Integrated Clinical Consortia™ teams in a formal contract. This contract supports the clinical team to make the right decisions for you because it measures and rewards quality care. That also means that the contract makes life easier for you… empowering the clinical team to make decisions means calls to your Scheme for authorisation and to enquire about claim payment just aren’t needed.

PPO Serve helps clinicians to form an Integrated Clinical Consortia ™, and we negotiate on their behalf with the Medical Schemes. We do all of this because our aim is to give you and your family access to better care!